CNN
—
Fitch issued a stark warning Wednesday that the congressional impasse that has pushed the US to the brink of default could jeopardize the US’s flawless credit rating.
Credit rating agencies have placed the top US credit on Rating Watch negative, reflecting the uncertainty surrounding the current debt ceiling debate and the possibility of a first-ever debt default.
The move comes as Republican and Democratic lawmakers are negotiating a higher U.S. debt ceiling, but no deal has yet been reached.Treasury Secretary Janet Yellen says US may not be able to pay bills June 1 at the earliestthe country faces unprecedented potential defaults that could have devastating consequences not only for the United States, but for the entire world.
Fitch, one of the three largest credit rating agencies along with Moody’s and S&P, has put the US’ AAA on “Ratings Watch Negative”, and if lawmakers don’t agree to a bill to raise the US Treasury’s debt ceiling, He suggested that the U.S. government bond could be downgraded. .
“Ratings Watch Negative reaches resolutions to raise or suspend the debt ceiling even as the X-date (the date the U.S. Treasury Department runs out of cash and contingency capacity without incurring new debt) looms It reflects a growing political partisanship that is hindering the
However, Fitch added that it still believes lawmakers will pass the resolution before the “X date”.
The White House on Wednesday pointed to a move by Fitch Ratings as a reason for rushing to raise the debt ceiling.
“This is another proof that default is not an option, and all responsible lawmakers understand it. The need to pass swiftly is reinforced,” a White House spokeswoman said in a statement.
The Treasury Department also made that point Wednesday night, saying the potential downgrade shows why Congress must act immediately on the debt ceiling.
“As Secretary Yellen has been warning for months, the brinkmanship of the debt ceiling will seriously harm businesses and American households, increasing short-term borrowing costs for taxpayers,” said Treasury spokeswoman Lily Adams. and threaten U.S. credit ratings.” statement.
“Tonight’s warning highlights the need for swift bipartisan action by Congress to raise or suspend the debt ceiling and avert a created crisis for our economy,” Adams said. .
In 2011, S&P First credit downgrade in history Downgraded US rating to AA+. More than a decade later, the institution still has not restored its rating.
A U.S. debt default could shock the entire global economy and trigger a recession, experts say. That would mean higher borrowing costs for the government and the American people themselves, which could be a big drag on economic growth.
Dow futures fell more than 85 points Wednesday night after Fitch’s warning, while the S&P 500 and Nasdaq traded in positive territory.
